COBRA Notification: Plan Administrators Beware!
When an employee loses their job, the administrator of a group health benefits plan has the burden of proving that it sent notice of the right to elect COBRA coverage to the employee. What does the administrator have to present to a court to prove it sent the notice?
The U.S. Court of Appeals for the Eighth Circuit issued a decision yesterday involving just this issue in Crotty v. Dakotacare Administrative Services. The law does not require that an administrator prove the COBRA notification was received by the employee. But it must prove that it has sent the notice by means reasonably calculated to reach the recipient. In Crotty, the administrator presented an “audit report” that demonstrated a computerized system had generated a notice letter to Ms. Crotty around the time of her termination. It also provided testimony from an employee about the administrator’s practice to mail out these computer generated letters.
However, no person recalled seeing or mailing the notification letters. The Eighth Circuit held that this was not sufficient for the administrator to discharge its burden of proof. It contrasted Dakotacare’s evidence with that presented in other cases where the administrator had provided, for example, a copy of the envelope addressed to the employee, evidence of the postage paid for the COBRA notification letter and an affidavit from an employee who recalled mailing the letter. While Dakotacare presented proof that it had a system for sending the notice, there was insufficient evidence that the letter went through the system: “we hold that the administrator must provide something that indicates that its mailing system was reliable and that the system was followed . . ..”